FINLAND

Photo by: kor

Republic of Finland

Suomen Tasavalta

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located between Sweden and Russia, Finland also borders the Baltic Sea,
Gulf of Bothnia, and Gulf of Finland. Finland's area, at 337,030
square kilometers (130,127 square miles), is slightly smaller than the
state of Montana. Finland shares a long border of 1,313 kilometers (816
miles) with Russia, 729 kilometers (453 miles) of border with Norway,
and 586 kilometers (364 miles) of border with Sweden. The remaining
1,126 kilometers (700 miles) of its boundary is coastline, excluding
islands and coastal indentations. The capital, Helsinki, is the
north-ernmost national capital in Europe, but it is found in the south
of Finland, as are the majority of its 94 towns. Finland also includes
the island province of Åland, located between Sweden and Finland.
The islands are locally autonomous, have their own government, and are
entirely Swedish-speaking.

POPULATION.

The population of Finland was estimated in July of 2000 as 5,167,486.
The population growth rate is a very small 0.17 percent and generally
has been small. Finland has a high proportion of elderly: only 18
percent of the population are under 14 years of age and 15 percent are
over 65.

Finland is extremely homogenous. Ethnic Finns make up 93 percent of the
population, ethnic Swedes 6 percent, and the rest is mainly made up of
the Sami (also called Lapps), Roma, and Tatar. There are 2 official
languages: Finnish (spoken by 93 percent of the population) and Swedish
(by 6 percent). Due to the harsh climate in the north, population is
concentrated in the lowlands in the south of Finland. Approximately 81.2
percent of Finns live in urban areas with around 1 million concentrated
in the capital, Helsinki, and its metropolitan area.

Formerly a source of emigrants (people moving outwards from a country),
Finland is currently becoming a destination for immigrants (people who
move into a foreign country). In 1996, the number of foreigners living
in Finland was 74,000, with Russians accounting for about 20 percent,
followed by inhabitants with Estonian, Swedish, and Somali former
citizenship.

INDUSTRY

METALS AND ENGINEERING.

Metals and engineering now constitute the largest sector of Finnish
industry, with motor vehicles and machinery driving much of the growth
of the late 1990s. In 1999, mechanical engineering and metals
manufacturing industries employed 187,175 people, and total revenues
reached around FMk123 billion.

Finland holds a leading international position in the building of
icebreakers, luxury liners, and other specialized ships. The are only 2
main ship building companies, Masa Yards and its rival, Finnyards, both
dominated by Norwegian companies. Masa Yards was bought by the Norwegian
firm Kvaerner in 1991 and Aker Maritime, another Norwegian firm, bought
60 percent of the shares in Finnyards in 1997. Both companies have
specialized in niche markets in shipbuilding, which has helped them
survive in an over-saturated global market. Finland's strong
pollution control and other environmental laws, plus neighboring
countries' environmental concerns and support from TEKES and
other research organizations, has led Finnish industry to specialize in
environmental technology. Finland made US$1.45 million of environmental
equipment in 2000, much of it used by Finland's own pulp and
paper industry.

INDUSTRIAL FORESTRY.

Finland's abundance of forestry products is the historical heart
of the Finnish export industry, accounting for almost 30 percent of
total exports—although only 2.4 percent of the GDP—in
2001. There was record growth in nearly every aspect of forest industry
in 2000. Total forest production increased by nearly 5 percent. Plywood
production rose the fastest—over 8 percent compared with the
previous years, with total production of about 1.2 million cubic meters.
Sawnwood production rose by nearly 5 percent in 2000 to 13.3 million
cubic meters. Paper and paper-board production reached 13.5 million
tons, 4.3 percent higher than in 1999. Turnover in the forest industry
in 2001 was worth FMk100 billion. In 1998, forest industries employed
95,886 people. Stora-Enso, the largest group in this sector, is the
second largest producer of newsprint products in the world and had
revenue of over FMk75 billion in 2000.

ELECTRONICS AND ELECTRO-TECHNICS.

The electronics and electro-technical equipment industry employed 63,700
people and had revenues of FMk114.6 billion in 1997, while high-tech
products accounted for almost 26 percent of total export value by 1999.
The majority of growth in this industry can be attributed to the
mobile-phone manufacturer Nokia. Nokia originated as a pulp and paper
concern but began investing its profits in high-tech research in the
early 1980s and is now one of the leading mobile phone manufacturers in
the world. Nokia is an example of Finnish industry's emphasis on
R&D; it spent almost 9 percent of its turnover on R&D in
1999. Nokia, however, is the only high-tech company in Finland with a
significant market share, unlike Sweden, which has a range of companies
in competition. This means that growth in this industry is dependent on
Nokia's fate, a risky situation.

CHEMICALS.

The third largest industry in Finland, the chemicals industry, had a
value of FMk56 billion in 1999, which was over one-tenth of the total
value in Finnish manufacturing. The chemicals industry focuses on a
number of core areas, including chemicals for the forest industry,
agribusiness, and other industries, as well as paints, plastic products,
environmental products, petro-chemicals and oil products, and most
recently biotechnical products. Finland's strong environmental
consciousness has fuelled not only innovation in chemicals to help the
environment—Finland was the world's top producer of water
treatment chemicals in 2000—but also environmentally conscious
business practices. In 1992 Finland joined a voluntary international
program called Responsible Care, which is an environment, health, and
safety initiative operating in 45 countries. Although only 12 percent of
chemical firms have signed on, some of Finland's largest
producers are members, meaning that over 80 percent of chemical
production is covered by the initiative. Members commit themselves to
continuous improvement in performance regarding environment protection,
health, and safety and to open communication about activities and
achievements on these issues. Some effects can be seen in the 60 percent
drop in employee accident rates over the past 10 years, while emissions
also fell significantly in 2000.

The recent growth of the electronics industry has spurred the production
of plastic components and packaging for electronic equipment. In 1999,
the chemical industry in total employed almost 39,000 people, or 9
percent of the total industrial workforce.

FOOD AND BEVERAGES.

The Finnish food industry is a good example of how Finnish industry
might grow throughout the 21st century. Finland has begun expansion into
the niche market of "functional foods," researching and
developing naturally-derived food additives which are deemed to have
health benefits. One of the more well-known is xylitol, a sweetener
derived from the birch wood chips of Finland's forests that has
been shown to prevent tooth decay. Xylitol can be found in many chewing
gums and as a sweetener in some medicines. The Finnish company Xyrofin
is the market leader in producing xylitol; its predecessor Suomen Sokeri
patented the industrial manufacturing method for xylitol in 1972. The
more traditional sectors of the food and drink industry are also based
on processing and refining raw materials and, in 1998, employed 40,700
people to produce a total output worth FMk49.3 billion. Meat processing
accounts for over one-fifth of the total
value-added
sector, followed by beverages and dairy products. Russia, despite its
economic troubles, is still a primary destination for food and drink
exports. In 1997 Finnish food and drink industries sold Russia around
336 million euro worth of goods.

CONSTRUCTION.

The construction industry faced a severe slump in the early 1990s. In
1994, commercial construction was less than 25 percent of what it had
been in 1990. The decline in production reversed in 1997, partly due to
government subsidies intended to rescue the industry. While a more
recent economic boom has led to housing shortages in the Helsinki
metropolitan area and a correspondingly high demand for house-building
there, there is still little construction in other regions. In 1997,
construction accounted for 5.1 percent of the GDP, employed 105,000
people, and produced FMk69 billion in revenues. Much of the construction
work was exported to Russia, which in 1997 accounted for 25 percent of
the construction industry's exports. The growth in construction
is expected to continue, and there is some hope that it will spread
outside of the city.

SERVICES

RETAIL AND WHOLESALE TRADE.

Sales volumes in trade and commerce increased 5 percent in 1997,
especially the purchase of vehicles, construction materials, and
household appliances.
Retail
, wholesale, hotels, and restaurants accounted for a little over 12
percent of the GDP in 1998. The sales industry is very concentrated,
with huge supermarkets accounting for over half of all retail outlets
for everyday goods. Approximately 217,000 people were employed in retail
and wholesale trade in 1998. The major Finnish wholesalers and importers
are Kesko Oy, SOK-chain, and Stockmann Oy. Each company also has its own
retail operation, each including several department stores and separate
chain stores. Kesko, a wholesale and supermarket chain, had a turnover
of FMk35.6 billion in 1998, which was 8 percent of total revenues
(FMk440 billion).

TRANSPORTATION.

Transportation and communications accounted for 10.2 percent of GDP in
1998. The increase of exports and industrial production in the second
half of the 1990s raised demand in land, rail, and water transport and
output grew by 8 percent in 1997. Road transport dominates domestically
as 93 percent of passenger traffic and 67 percent of goods transport
take place on the dense network of Finnish roads. The railway sector is
currently state-owned, although discussions are underway to allow other
companies to use the rails for moving freight. There are currently no
plans to privatize the Finnish railway company, which provides
long-distance passenger transport. Shipping is important
for Finland's international trade; in 1998 total shipping
(imports and exports) between Finland and other countries totaled 76.59
million tons. Of that, two-thirds were shipped to other EU countries, 18
percent to Germany, and 16.4 percent to Sweden. Domestic shipping
totaled 12.88 million tons, up from 11.85 million tons in 1997. Due to
Finland's extremely cold winters, Finnish shipbuilding and
shipping is dependent on the building and use of icebreakers. Total
employment in the transport sector was 154,000 and total turnover in the
same year was FMk440 billion.

TELECOMMUNICATIONS.

Telecommunications contributed only a little over 2 percent to the GDP
in 1997; however, it is the existence of a large, inexpensive, extremely
sophisticated and efficient network that has enabled almost every other
industry to grow. The telecommunications sector was fully opened to
competition in 1995, and the government passed a series of laws to
increase the flexibility of telecommunications operators sharing and
trading access to infrastructure. The government also eliminated the
need for operators constructing a fixed telephone network to purchase a
license, although licenses are still required for mobile phone networks.
High competition in this sector has kept tariffs among the lowest in
Europe. Data processing services are in great demand owing not only to
the Internet but also to the turn of the millennium and the adoption of
the euro. The state-owned Sonera Corporation (previously Telecom
Finland) and the 45 privately owned local telephone companies operating
under the Finnet Group cover the majority of the telecommunications
market.

FINANCIAL SERVICES.

Although accounting for only 3.5 percent of the GDP in 1998, financial
services have been the source of fastest growth in the private services
sector. Banks and other services have been recovering steadily since the
recession of 1990 to 1993, and by 1998 net operating profits in the
financial sector were FMk7.6 billion. Approximately 42,000 people were
employed in the banking sector in 1999. A recent development, spurred by
the advances in connectivity and other computer technology, is the rapid
increase in Internet banking, which rose to around 1.5 million users in
1998. Merita Nordbanken was formed from the merger of the local Merita
and the Swedish Nordbanken banks Together with the cooperative Okobank
group and the state-owned Leonia. These 3 largest banking groups account
for 87 percent of all domestic lending and 85.8 percent of deposits.

CAPITAL:

Helsinki.

MONETARY UNIT:

The markka (FMk or FIM) or finnmark. One markka equals 100 penni.
Banknotes come in denominations of FMk20, 50, 100, 500, and 1000. There
are 1, 5, and 10 markka coins, and 1, 10, and 50 penni coins. The markka
will remain in circulation until 28 February 2002, when it will be
completely replaced by the new European currency, the euro. The exchange
rate for the euro is 1 euro=5.94573 markka.

User Contributions:

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Riley